By Callum Keown
European stocks started the new year with a rally on Thursday as trade optimism continued and China’s central bank gave markets a boost.
The Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.42% jumped 1%, along with the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.47% , while the French CAC /zigman2/quotes/210597958/delayed FR:PX1 +0.33% climbed 1.4% in early trading. The German DAX /zigman2/quotes/210597999/delayed DX:DAX +0.27% gained 1.1% and Italy’s FTSE MIB /zigman2/quotes/210598024/delayed IT:I945 +1.75% rose 1.4% on the first day’s trading of 2020.
U.S. stocks followed higher, with the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +2.24% , the S&P 500 /zigman2/quotes/210599714/realtime SPX +2.28% and the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +1.72% all hitting fresh record highs shortly after the open.
What’s moving the markets?
After a strong end to 2019 followed by the New Year’s holiday, renewed optimism over a U.S.-China trade deal helped propel European stocks higher on the first day of 2020 trading. President Trump also plans to visit Beijing to begin talks on a ‘phase 2’ deal, while ‘phase 1’ will be signed in a White House ceremony on Jan.15.
China’s central bank added to the feel-good factor, announcing on Wednesday it would cut the amount of money banks will be required to have on hand from Monday - in a bid to boost the slowing economy. The reserve requirement ratio will be cut by 50 basis points, which is expected to release about 800 billion yuan ($114.6 billion) into the economy.
Which stocks are active?
Tullow Oil /zigman2/quotes/205079109/delayed UK:TLW +12.69% fell 8% after the company said it found four metres of net oil pay at its offshore Guyana well, which was less than expected. The oil and gas company said the Carapa-1 exploration well, drilled to a depth of 3,290 metres in 68 metres of water, would now be plugged and abandoned.
Airbus /zigman2/quotes/208224336/delayed FR:AIR -3.70% shares rose 2.6% after reports the European plane maker beat its own delivery forecast for 2019 to topple U.S. rival Boeing /zigman2/quotes/208579720/composite BA -5.68% as the world’s largest plane maker. Airbus delivered 863 jets last year, Reuters reported, 3 higher than its guidance.
Mining stocks enjoyed solid gains following China’s RRR cut announcement. The policy news from the world’s largest metals consumer, sent Glencore /zigman2/quotes/201400686/delayed UK:GLEN +6.48% shares up 2.8% and Antofagasta /zigman2/quotes/200173667/delayed UK:ANTO +1.99% 3.1% higher.